March 12, 2019

The United States says the Boeing 737 MAX 8 is airworthy as regulators scrutinise two fatal crashes of the new model of aircraft since October.

However, the Federal Aviation Administration (FAA) has demanded "design changes" from Boeing by April.

An Ethiopian Airlines MAX 8 bound for Nairobi crashed minutes after take-off on Sunday, killing all 157 onboard and raising questions about the safety of the new variant of the industry workhorse, one of which also crashed and killed 189 people in Indonesia in October.

The discovery of black box recorders means the cause of the crash may be quickly understood, as long as recordings are not damaged, although it typically takes a year for a detailed investigation to be completed.

China and Indonesia grounded their fleets of 737 MAX 8 aircraft earlier on Monday, citing safety concerns, contributing to a drop in Boeing shares that wiped billions of dollars off the market value of the world's biggest plane maker.

In a notice, the FAA said Boeing was working to complete “flight control system enhancements, which provide reduced reliance on procedures associated with required pilot memory items”.

The FAA also said Boeing “plans to update training requirements and flight crew manuals to go with the design change” to an automated protection system called the Manoeuvring Characteristics Augmentation System or MCAS.

The changes also include MCAS activation and angle of attack signal enhancements, which was a function that Lion Air pilots fought in an accident that brought down the same model of jet.

Reuters and other media outlets have reported that Boeing had for months planned design changes after the Lion Air crash in Indonesia but the FAA notice is the first public confirmation.

The FAA said in the notice made public that external reports are drawing similarities between the crashes in Ethiopia and Indonesia.

“However, this investigation has just begun and to date we have not been provided data to draw any conclusions or take any actions,” according to the Continued Airworthiness Notification to the International Community for Boeing 737 MAX 8 operators.

In an email to employees that was seen by Reuters, Boeing chief executive Dennis Muilenburg said he was confident in the safety of the 737 MAX.

Boeing may face lawsuits from victims' families in the US, where legal compensation payments for people killed in plane crashes could run around US$2 to US$3 million per person, depending on the law applied, compared to about US$200,000 in Ethiopia, according to Justin Green, a New York-based aviation lawyer who has represented families in cases against Boeing.

Boeing declined to comment on its insurance cover.

The company's share price briefly had its biggest one-day drop since the 9/11 attacks of 2001, falling as much as 13.5 per cent early on Monday on fears that two crashes in such a short time could reveal flaws in the new plane.

On Monday, FAA chief Dan Elwell said the notification basically “informs the international community where we are and (gives) sort of … one answer to the whole community”.

He dubbed it a “broadcast to the world about where we are.”

Paul Hudson, the president of website Flyers Rights and a member of the FAA aviation rulemaking advisory committee, on Monday said the plane should be grounded.

The National Transportation Safety Board and the FAA are both at the crash site in Ethiopia, Chao said.

Boeing, whose shares closed down 5.3 per cent at US$400.01 in the heaviest trading since July 2013, did not immediately comment on the FAA notification.

The 737 series, which has flown for more than 50 years, is the world's best-selling modern passenger aircraft and viewed as one of the industry's most reliable.

China ordered its airlines to ground the jet, a move followed by Indonesia and Ethiopia and individual carriers such as South Africa's Comair and Morocco's Royal Air Maroc.

Virgin Australia has ordered 30 of the same jets, but none are currently in circulation.

Other airlines, from North America to the Middle East, kept flying the 737 MAX 8 on Monday after Boeing said it was safe.

Boeing's 737 MAX is the newest version of a jet that has been a fixture of passenger travel for decades and the cash cow of the world's largest aircraft maker, competing against Airbus's A320neo family of single-aisle jetliners.

The MAX has a bigger and more efficient engine compared to earlier 737 models.

Boeing rolled out the fuel-efficient MAX 8 in 2017 as an update to the already redesigned 50-year-old 737, and had delivered 350 MAX jets out of the total order tally of 5,011 aircraft by the end of January.